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EU Policy Priorities for 2022

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At the Association of Finnish Local and Regional Authorities (AFLRA) the aim of our EU lobbying work is to secure and improve the conditions in which Finnish local authorities operate. To do that we influence the EU in a timely and proactive manner, also taking advantage of the opportunities for international cooperation that the EU membership offers. The EU has major impacts on the workings of Finnish local authorities. An AFLRA report shows that the European Union influences about 60 per cent of the functions and decisions of local authorities. We determine our EU lobbying priorities based on the needs of local authorities. In 2023, we will focus on the following five priorities:

  • The EU programming period 2021–2027 — recovery and new growth
  • EU urban policy — cities promote vitality and drive forward the economy
  • A European Green Deal
  • A Europe fit for the digital age"
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1 Objectives and priorities for lobbying the EU in 2023

A Union standing firm and united

We are now over halfway into the current European Commission’s term of office. The Commission took up its duties in December 2019 and has since seen one crisis after another. A persistent pandemic severely plagued the whole world for two years. Once it started to abate, the world woke up to a new crisis on 24 February 2022 when Russia attacked Ukraine. The completely irrational war has created a new kind of situation in Europe. Russia has destroyed critical infrastructure in Ukraine and blatantly attacked civilian targets during the war. Living conditions remain difficult despite Ukraine’s continuous efforts to repair critical infrastructure. The reconstruction of the country in the future will be a long and costly process and the EU is preparing to be closely involved in it.

In the aftermath of the war, energy and food prices have risen in the EU Member States. Decoupling from Russian energy is testing the EU’s unity. The average European citizen is struggling with rising costs and the falling value of money. With the energy crisis and a rising inflation, the year 2023 will not be easy for Ukraine nor for the EU countries.

Despite the crises, the Commission’s work programme for 2023 continues to deliver on its ambitious goals. This year's heading is “A Union standing firm and united”. The Commission’s six themes for its five-year term provide a framework for the new policy initiatives: 1. The European Green Deal, 2. A Europe fit for the digital age, 3. An Economy that Works for People, 4. A stronger Europe in the world, 5. Promoting our European way of life, 6. A new push for European democracy. A large number of proposals from the previous year are still in process and work on them will continue in 2023, but there are also many new initiatives.

The year 2023 will be the European Year of Skills. The aim is also to follow up on some of the proposals made in the Conference on the Future of Europe and invest more efforts in the inclusion of citizens.

The Association of Finnish Local and Regional Authorities (AFLRA) promotes the interests of Finnish local authorities in the EU to secure and improve the conditions in which they operate. The aim is to influence legislative preparation and matters pending in the EU at the right time and on as many channels as possible. Our primary goal is that local authorities should have guidance and resources for fulfilling any new obligations. Each year, the AFLRA defines its EU lobbying objectives and priorities based on the European Commission’s work programme. This document supports the AFLRA’s lobbying activities both in Finland and in Brussels.

The AFLRA has defined four main themes for EU advocacy in 2023:

  1. The EU programming period 2021–2027 — recovery and new growth; the next progamming period
  2. EU urban policy — cities promote vitality and drive forward the economy
  3. The European Green Deal
  4. A Europe fit for the digital age

Within the framework of the four main themes, the AFLRA has updated its EU lobbying priorities on the basis of the Commission’s work programme and the ongoing and new initiatives and proposals. We will monitor their progress and influence them. Over the course of the year, unexpected issues may arise that have not been anticipated but which require a quick lobbying response.

This document summarises the AFLRA’s views on the following EU matters and proposals that affect local government:

  • The EU programming period 2021–2027 — recovery and new growth and the preparation of the next progamming period– > a mid-term review
  • EU urban policy — cities promote vitality and drive forward the economy; mainstreaming twin transition
  • The European Green Deal
    • Fit for 55 climate and energy legislation
    • energy directives
    • safeguarding biodiversity
    • the zero-pollution package
    • furthering the objectives of the circular economy model
    • Finland's accessibility
  • A Europe fit for the digital age
    • skills, infrastructure, virtual reality
    • Cybersecurity Skills Academy
  • An Economy that Works for People
    • Capital Markets Union and economic governance review, new own resources
  • Promoting our European way of life
    • the migration and asylum system
    • European Year of Skills 2023

We are closely monitoring the following:

  • A stronger Europe in the world and a New Push for European Democracy

    • Defence of democracy package
    • Better Regulation principles
    • security and defence capability; maritime security strategy

2 EU programming period 2021–2027 — recovery and new growth

Cities and municipalities both actively develop public services and infrastructure and provide platforms for the innovation activities of companies and research institutes. The key EU funding programmes should therefore serve cities and municipalities in the best possible way. The structure and contents of the EU funding programmes should be designed to encourage cities and municipalities to participate in EU-funded development projects and give them the opportunity to take part in the preparation of programmes affecting them. Regions have a key role in regional development.

From the local authority viewpoint, the programming period 2021–2027 should see the development of especially those EU funding instruments that promote municipal climate, energy and environmental measures; sustainable transport systems and accessibility; innovations and digitalisation; and that support areas such as employment and skills development.

A flexible use of various financial instruments and coordination of funding at local and regional levels should be made possible in the new programming period. A reduction of administrative burden makes it easier, especially for scarcely resourced local authorities, to participate in the implementation of investment and development projects. At the same time, we must already look ahead to the programming period after 2027 and start preparing for it.

2.1 The EU’s recovery funding should be closely linked to new openings for local and regional economies and to measures that have a stimulative effect

Cities and municipalities play a central role in driving reforms and partnering in various investment and development activities. Local and regional actors should be involved in decisions concerning projects that support the reforms.

Investments financed through the EU’s recovery instrument, regional action under the Just Transition Fund and other EU and national measures should all support the actions of local and regional authorities for recovering in the aftermath of the crisis. The expertise and experience of cities and municipalities in developing various ecosystems should be recognised and used as part of the recovery and renewal and taken into account in the allocation of funding.

From a local authority viewpoint, it is important to drive forward investments that support energy transition, climate action and accessibility, promote innovation and the use of digitalisation, and support employment, entrepreneurship and skills development. The solutions should be based on the different needs and opportunities of cities, municipalities and regions, and they should support businesses in recovering from the Covid-19 crisis.

2.2 Regional and structural policy programme funding as part of easing the crisis

The new programming period began in earnest in early 2022 against the backdrop of an exceptional pandemic and the ensuing global economic crisis. This should be taken into consideration in the assessment of regional and structural policy in connection with the mid-term review of the EU’s multiannual financial framework, to be carried out in 2023. Local authorities should be ensured opportunities to be actively involved in fulfilling regional and structural policy objectives. The role of local government in the management of local economic and employment policies and regional climate action is closely linked to the implementation of the recovery measures.

As part of the recovery from the Covid-19 crisis, the various programmes should seek flexible ways of carrying out projects, if necessary. For example, the share of municipal and other public financing could be temporarily reduced at the start of the programming period. Municipal contributions should not be required in the national implementation of projects that are financed through the Rescue and Recovery Fund. We have advocated the removal of the requirement for municipal contributions for example regarding the Act on Broadband Construction Aid.

2.3 Needs and opportunities of the local and regional levels should be taken into account in the financing of the green and digital transitions

In the pursuit of a greener and lower-carbon Europe, it is important to ensure that climate and circular economy action can continue to be developed at the local and regional levels. As the green and digital transitions will be promoted through a wide range of EU funding programmes, financial instruments, such as Horizon Europe and the Digital Europe Programme, that are not administered nationally should also take account of local government development needs.

It should also be possible to use EU funding for promoting employment, social fairness, gender equality and non-discrimination and for integrating immigrants and encouraging citizen-driven development in urban and rural areas.

2.4 Funding instruments should take account of the specific features of rural areas as well as Finland's CAP plan

Local and regional levels should have a bigger role in the national implementation of cohesion policy, the common agricultural policy and rural development. Rural policy, Finland's CAP plan and regional and structural policy are the main instruments for rural development. The specific features of rural areas should also be considered in other EU funding instruments, including Horizon Europe, InvestEU, Erasmus+ and the financing instruments for the development of transport connections.

Inquiries: Annukka Mäkinen, Development Manager, and Taina Väre, Senior Adviser

3 EU urban policy — cities promote vitality and drive forward the economy

Cities and urban regions are an important part of our national social policy that aims at economic growth, employment and well-being. Cities are a natural environment for innovations and economic renewal. Cities are nodes in many international value chains, and their role becomes even greater as service exports increase. Cities are also at the heart of the sustainability transformation. They have a special role in promoting the green transition, circular economy, new kinds of clusters of excellence and innovation ecosystems. Cities are also crucial to achieving the EU's climate objectives. The EU’s urban mission “100 climate-neutral cities by 2030” is an effective new tool for supporting and promoting climate objectives in cities. The EU and national governments need to continue to provide firm support for the participating cities to ensure the mission’s effectiveness.

Urban policy focuses on the special issues of cities and urban regions. The capability of cities to invest in sustainable growth and development should be ensured. It is important to develop efficient and sustainable transport systems. Finland should invest more efforts in developing the Trans-European Transport Network (TEN-T) system and applying for funding from the Connecting Europe Facility (CEF). With urbanisation continuing, the conditions for housing supply and the reduction of segregation are key issues for urban development.

The various administrative structures of urban areas are a challenge for the areas’ development. It is therefore important to support cooperation structures that have proved to be effective and the dissemination of best practices.

Finnish cities welcome the implementation and development of the EU Urban Agenda and the renewal of the Leipzig Charter on Sustainable European Cities. The views of cities on better regulation deser

Cities need programmes and financial instruments designed to promote digitalisation, new technologies and skills development. For example, the new Digital Europe Programme and the European digital innovation hubs, test and experimental environments, and data and AI projects funded under the Programme support cities in developing and introducing innovative digital solutions. It should be ensured that other key EU funding programmes besides the ones specifically directed at cities also take account of urban development needs. The AFLRA’s activities are geared at promoting sustainable urban policy in the EU.

Inquiries: Henrik Lönnqvist, Manager of Urban Development

4 The European Green Deal

4.1 The climate and energy legislation proposals of the Fit for 55 package should support sustainable local government climate action

With the publication of the climate and energy package in July 2021, the Commission wants to ensure that the EU will achieve its target to reduce emissions by at least 55 per cent by 2030, as compared to 1990 levels. Some of the proposals of this important legislative package have a direct impact on cities and municipalities, while others have indirect effects.

The updating of the legislation should support local authorities in reaching their own climate targets and help them to reduce emissions in areas such as mobility and the built environment in an ecologically, economically and socially sustainable way. Involving both local and regional private and public sector actors in energy and climate work is an important way to ensure that the measures are efficient and acceptable. The resources for local investments supporting the objectives of the climate and energy package must be ensured, the administrative burden of funding must be kept to a minimum and the various forms of funding must be coordinated.

Duplication of policy instruments should be avoided. For example, with a possible expansion of emissions trading, the objectives and measures of the effort sharing sectors should not overlap. In a rapid transition, resources should be allocated to the assessment and monitoring of the impacts and effectiveness of the ever-tightening policy instruments to ensure that the corrective measures are timely and justified.

The Commission's initiative on a Social Climate Fund emphasises the fairness of EU climate action. In the pursuit of a carbon-neutral society, we have to make choices as to the kind of harm and costs climate action can cause so that the adverse impacts of climate change can be avoided in the future. The objectives and measures must be socially acceptable. As climate policy guidance develops, new ways of compensating for its adverse effects are necessary.

The Member States should be allowed to fully plan and provide compensation for individual national and local impacts in accordance with the principle of subsidiarity.

Inquiries: Pauliina Jalonen, Senior Adviser on Climate Policy

4.2 Flexibilities in the implementation of the energy directives should be exploited

The Commission's proposal to update the so-called energy directives of the Fit for 55 package tightens requirements with the aim to contribute towards the 55 per cent reduction in emissions by 2030. However, the weakness of the proposals for updating the Energy Efficiency Directive (EED), the Renewable Energy Directive (RED III) and the Energy Performance of Buildings Directive (EPBD) is that they increase detailed and cost-inefficient requirements while contributing very little to the Fit for 55 package’s main objective, the reduction of emissions, across the EU.

The effectiveness of the proposals varies from one Member State to the other depending on how advanced the country’s energy use and energy systems are. The differences are notable. Finland’s starting point is better than that of many other Member States. We have already for long been improving energy efficiency, and the emissions from the energy system are constantly decreasing. The obligations imposed by the Fit for 55 package have been determined with little attention to the different starting points of the Member States; the intention has been to add obligations equally to every Member State.

Articles 5 to 8 of the proposed amendments to the EED tightened the energy efficiency obligations of public contracting authorities. The changes would include a new obligation for the public sector to reduce final energy consumption by 1.7 per cent, an annual renovation requirement for the entire public building stock (at least three per cent of the total area) to the nearly zero-energy building (NZEB) level, and energy efficiency requirements for the purchase or rental of buildings. The obligation to renovate public buildings would mean additional annual investments of around EUR 3.6 billion in the local government sector. Yet, it would reduce Finland's greenhouse gas emissions by as little as 0.02 –0.03 tons per year according to the calculations of the Finnish Energy Authority.

The proposal for updating the RED III includes minimum requirements for the use of renewable energy in individual buildings. Greenhouse gas emissions from a building depend on the energy it uses. Property owners may not be able to influence the energy-related emissions at all through their own choices. The RED III also proposes to tighten the requirements for the sustainability of biomass fuels used in heating plants. This would unreasonably increase the administrative burden especially in small heating plants.

The Commission's proposed amendment to the EPBD would, if implemented, make zero-emission buildings the standard for new buildings and introduce minimum requirements to existing buildings. The requirements for existing buildings would also enter into force in the buildings that are not renovated. In addition, the proposal would substantially tighten the requirements for recharging infrastructure especially in non-residential buildings.

In 2023, we are gradually shifting the focus of our advocacy to the national implementation, even though the negotiations, known as trilogues, between the Commission, the Parliament and the Member States still continue in the early part of the year. Where possible, we will seek to influence the final versions of the directives, which may considerably differ from the Commission's proposal. In national implementation, the objective must be to make full use of the flexibilities provided by the energy directives so that local and regional strengths can be exploited in an operationally, economically and ecologically sustainable manner across all Finnish cities and municipalities. Any new EU measures resulting from the energy crisis created by Russia’s military aggression should also be closely monitored and efforts made to influence them as necessary.

Inquiries: Vesa Peltola, Energy Adviser


4.3 For the protection of biodiversity and an effective pursuit of a toxic-free environment, local circumstances should be considered and support given to local authority action

4.3.1 Implementation of the biodiversity strategy

On 20 May 2020, the European Commission published a new biodiversity strategy aimed at halting the loss of biodiversity by 2030. The biodiversity strategy sets targets for nature protection and restoration and proposes

measures to achieve them. The strategy sets ambitious targets for the protected areas within the EU: 30 per cent of both the EU’s land area and sea area should be protected. The EU is also launching a restoration programme to improve the ecological status of various terrestrial and aquatic living environments.

The strategy proposes that European cities of at least 20,000 inhabitants develop so-called urban greening plans by the end of 2021 “to bring nature back to cities and reward community action”. In Finland, the opportunities for implementing urban greening plans are assessed as part of the National Strategy and Action Plan for Conservation and Sustainable Use of Biodiversity.

In 2022, the Commission implemented parts of the strategy together with the Farm to Fork Strategy. In addition to other initiatives, the Commission has proposed new rules on the sustainable use of pesticides to ensure that the 50 per cent reduction target set in the Biodiversity Strategy and the Farm to Fork Strategy will be achieved by 2030. The AFLRA considers it important to reduce the use of pesticides to safeguard ecosystem services, which cities and municipalities rely on. The priority chosen by the Commission does not have any great impact on municipal activities.

The Commission has, furthermore, proposed a nature restoration law under which at least 20 per cent of the Union's land and sea areas should be restored by 2030 and all ecosystems in need of restoration by 2050.

In the proposed form, the regulation would have substantial impacts on Finnish local authorities. It would affect local authorities in their different roles, for example in statutory land use planning and as authorities and landowners. The regulation would also have impacts on municipal services that require construction and infrastructure, and on the cost of these services.

It is necessary that Article 6 of the regulation proposal is amended in the subsequent preparation to reflect the views of local authorities. Safeguarding biodiversity requires effective and appropriate measures, which also take into account the starting points of the Member States. In the subsequent preparation, the solutions to deliver the objectives should be based on local circumstances and real needs and be relevant to the objectives across the EU. The geographical scope of Article 6 of the regulation proposal should be reviewed to avoid unreasonable situations, such as in the case of Finland.

The AFLRA finds it important that the versatile role of local authorities in delivering biodiversity targets is recognised in the implementation of the biodiversity strategy. At the same time, local authorities’ opportunities for

reconciling the biodiversity targets with other land use needs should be ensured. Stronger incentives to encourage nature conservation in local authorities should be put in place to enable a range of extensive, locally acceptable nature conservation actions especially outside conservation areas.

Local authorities should be offered usable funding and information to support their action on biodiversity. Biodiversity issues should be considered together with climate issues in the implementation of the biodiversity strategy. The aim should be to mainstream nature conservation. The wellbeing impacts of biodiversity in a rapidly urbanising Europe should be examined as a specific issue.

4.3.2 Zero-pollution package

As part of the European Green Deal, the Commission wants to create a non-toxic environment to protect European citizens and ecosystems. To achieve this, the Commission will continue the implementation of the zero-pollution action plan for the prevention of air, water and soil contamination. Follow-up measures to the zero-pollution action plan will be implemented for example in the area of integrated water resource management to combat surface water and groundwater pollutants and to improve air quality. The aim is to align the standards with the recommendations of the World Health Organization. New proposals for limit values were published in autumn 2022. The Commission also proposes measures for limiting the addition of microplastics to products and reducing their release into the environment. The Commission will address the challenges related to the sustainability of biodegradable and compostable plastics and identify applications with environmental benefits. The Commission will also review the legislation on classification, labelling and packaging and aim for a targeted revision of the REACH regulation for the protection of human health and nature.

In addition to the above measures, in autumn 2022 the Commission presented a proposal for a major revision of the Urban Waste Water Treatment Directive. The proposal’s impacts on waste water treatment and sewerage are greater than anticipated. The Directive contains objectives which, if implemented, threaten to substantially increase the costs of municipal water utilities. Some of the measures are justified. However, the AFLRA is concerned that several of the proposed measures are inappropriate to Finland's circumstances and that decision-making powers have been delegated to the Commission. For example, according to the proposal the Commission could determine the treatment requirements for individual waste water treatment plants in certain areas in the future, and Finland’s cold conditions could no longer be considered in the

requirements for nitrogen removal in the same way as before. This would have significant cost implications for Finland in relation to the rest of Europe.

The Commission will prepare a legislative proposal on soil health in the second quarter of 2023. Soils are crucial for food, nature and our economy and deserve the same level of protection as water, air and the marine environment. The Soil Health Law proposal was announced in the EU soil strategy for 2030. The regulation will affect local authorities in their various roles, for example as landowners, planners, builders of infrastructure and permit authorities. One key aspect is how the regulation will directly and indirectly impact especially zoning and land use planning. It is essential to properly assess the relations between the various legal acts and their combined impact.

The EU’s environmental regulation has a major impact on the way that local authorities carry out their environmental tasks. The AFLRA considers it important that the EU's environmental policy supports the Member States in ensuring a clean environment in a sustainable and reasonable way. A clean environment sets a backdrop for the basic services provided by local authorities, the well-being of local residents and the livelihoods dependent on a clean environment.

In the future, more efforts should be concentrated on an efficient implementation and development of current legislation. In countries such as Finland, support for implementation should be provided for local authorities, because they have considerable responsibility for the implementation and monitoring of environmental regulations. The needs of Finnish local authorities and the specific circumstances of cities, municipalities and regions should be taken account of in the preparation and implementation of the zero-pollution package. Action taken as part of the zero-pollution package, such as the revision of the Urban Wastewater Treatment Directive and water resource management measures should not lead to unnecessary overregulation jeopardising the essential services produced by local authorities, for example affordable and comprehensive water services, which improve the state of the environment.

The AFLRA considers it important that the Commission adheres to the principle of minimising the regulatory burden and fully adopts the “One In, One Out” approach. The AFLRA welcomes the Commission's proposal that the expected costs of complying with EU legislation are determined more transparently and administrative costs compensated.

Inquiries: Tommi Maasilta, Environmental Manager, and Tuulia Innala, Senior Adviser

4.4 Furthering the objectives of the European circular economy model requires product policy measures to complement emissions reduction

In 2023, the Commission will continue the implementation of the circular economy action plan by proposing measures to reduce waste and the environmental impact of waste, with a focus on food and textile waste. The Commission will concentrate on measures to improve textile recycling and propose increasing producers’ responsibility for textile waste treatment. The Commission will continue to promote sustainable product policy initiatives and seek to improve the rights of consumers to repair products at fair prices. The implementation of the measure would extend the lifetime of goods and thus promote the objectives of the circular economy. The Commission also proposes measures to limit the addition of microplastics to products and to decrease their release into the environment. The Commission will address the challenges related to the sustainability of biodegradable and compostable plastics and identify applications with environmental benefits. The Commission also intends to revise legislation on classification, labelling and packaging. A proposal to that effect was put forward at the end of November 2022.

The AFLRA supports the Commission’s aim to develop the requirements for product planning towards more environmentally friendly and sustainable products. It is also important to promote the repairability of products and the profitability of repairs as opposed to new acquisitions. When products are designed and new types of materials are placed on the market, attention must be paid to the durability and harmlessness of the products and to the suitability of new products and materials for their intended uses. Particular attention should be paid to the sources of emissions of microplastics. Limiting emissions at later stages must not lead to unsustainable and costly solutions for cities and municipalities, such as unnecessarily strict requirements for storm water treatment. The AFLRA welcomes measures to reduce food waste and to promote the recycling of textile waste. However, the AFLRA has reservations about increasing producers’ responsibility for textiles because it would pose challenges to Finland. We already have a relatively advanced municipal system for the collection and treatment of textile waste. This is why the local government perspective should be considered in the development and implementation of new initiatives and regulations.

Inquiries: Tuulia Innala, Senior Adviser

4.5 Finland’s accessibility and a shift to sustainable and smart mobility

Finland's logistical and geopolitical positions have changed. This requires more determination in ensuring the accessibility and international connections of Finland’s regions and central cities. Important tools for this are the TEN-T projects funded through the Connecting Europe Facility (CEF) and influencing the ongoing revision of the TEN-T Regulation.

An important goal in the revision of the TEN-T Regulation is to extend the core network to the ports in northern Finland and to retain the status of the current comprehensive network ports. More flexibilities should be added to the requirements for urban nodes and to the data collection and reporting obligations proposed by the Commission. The requirements should also be aligned with funding opportunities.

The transfer of the last sections leading to the Russian-Belarusian border from the core to the comprehensive network must not jeopardise the eligibility of these connections under CEF. The accessibility of the different regions of the Member States, such as Eastern Finland, must not be unnecessarily undermined in a changed geopolitical climate. Although Finland needs an exemption from the European standard track gauge, it is important to keep in mind future potential and integration, for example Finland's connections to Sweden, Norway and Rail Baltica.

To have better access to EU support, Finland should invest longer-term and more timely efforts in the planning and prioritisation of CEF-eligible projects, such as rail projects. This also requires increased national funding for covering the projects’ self-financing share. Finland should contribute to the Rail Baltica project because it will create a rapid connection between central and northern Europe.

A shift to sustainable and smart mobility within the EU is crucial. The Commission is preparing several initiatives to further this goal, for example the revision of the Intelligent Transport Systems (ITS) Directive and an update to the regulation on Multi-Modal Travel Information Services (MMTIS) supplementing the ITS directive, and an initiative on the promotion of Multimodal Digital Mobility Services (MDMS). The Commission will consider policy measures concerning, for example, passenger rights during multi-modal journeys. The discussions on the Alternative Fuels Infrastructure Regulation (AFIR) continue as well.

A transition to green and digital mobility requires common objectives and commitment and an understanding of the regional circumstances of the Member States. It is also important to understand the nature and specific requirements of the activities of the parties for whom new responsibilities are assigned. The obligations imposed on local and regional public actors should be balanced with the benefits to be achieved and with the opportunities, challenges and economic limits of effectively fulfilling the obligations. Overly detailed regulation at the European level should be avoided. Public actors should have discretion to adopt the most appropriate and cost-effective solutions in implementing the transition.

The regulatory framework for mobility should promote mobility and the integration of mobility services in a way that increases the share of sustainable modes of transport, especially in urban areas. The EU should avoid regulatory changes that undermine the legal (EC Regulation 1370/2007 on public service contracts) and financial basis for the organisation of public transport in urban areas. Urban regions play a pivotal role in meeting the emission reduction targets set for transport.

The directive on the maximum authorised dimensions and weights for road vehicles will be revised. High capacity transport (HCT) connections should be concentrated on carefully selected routes, which lead to ports, logistics centres and industrial areas. Dense city centres should be avoided. The street network plays a key role in ensuring safe walking and cycling.

Inquiries: Johanna Vilkuna, Development Manager, and Paula Kosunen, International Affairs Coordinator

5 A Europe fit for the digital age and Finnish cities and municipalities

The EU considers the digital transformation as a cross-cutting social theme in areas such as transport, the economy and the environment. This diversity is the starting point of our advocacy on digital transformation. Local authorities of the future will need legislation that supports digital service innovations and digital innovations of citizens.

The EU is looking for a direction for the laws governing digitalisation in an increasingly unstable world. The aim is a more integrated internal market, which will enable the Member States to jointly address challenges such as the availability of raw materials, the security of supply chains or the independence of data. Many of the Commission's 2023 work programme’s initiatives related to digital transformation are also relevant to current urban and community development.

Cities and municipalities are closest to citizens and their role as service providers and promoters of innovation should not be forgotten. We need EU legislation that supports these opportunities in the public sector. Our cities and municipalities have the need, motivation and understanding to digitalise everyday life. For example, cities have understood that the development of the data economy paves the way for new services for local residents and businesses and promotes innovation and research.

In view of this, we at the AFLRA have recognised the importance of monitoring future-oriented technologies and the conditions for them, for example skills and talent, infrastructure and cyber security. The year 2023 saw the Commission put virtual reality on its work programme agenda for the first time.

We will continue to influence and monitor the EU’s ongoing digital initiatives, especially the Data Act and the artificial intelligence act. These acts have a wide range of impacts on the local government sector, for example on

transport. In this context, we will also focus on cyber security, for example in terms of products.

To sum up, our priorities in digitalisation are:

  • Use of data in the activities of cities and municipalities and the related EU-level data spaces
  • Digitalisation of transport services and mobility
  • Participatory and future-oriented technologies in the activities of cities and municipalities
  • Better consideration of public sector needs in the EU legislation governing digitalisation

Inquiries: Jaana Jormanainen, Senior Adviser

6 An Economy that Works for People

A deepening of the Capital Markets Union and completion of the Banking Union; local and regional levels should be taken better account of in the EU’s economic policy.

The Commission's work programme 2023 includes many initiatives besides those directly related to the economy that may have an impact on local government finances.

It remains unclear what impact the regulations introduced after the financial crisis have had on economic activity, employment and public finances. The management of the Covid-19 pandemic has had a significant additional impact, and so has the war in Ukraine and the ensuing energy crisis mainly provoked by the war. The EU should therefore continue to make decisions that will generate economic growth, increase employment and ensure sustainable public finances. The functioning of the financial markets, operating conditions and management of financial risks should also be improved.

However, there is generally no need for new or stricter EU regulation, but rather for promoting the existing regulations within EU economic policy governance. For economic governance to be efficient, local and regional levels should be taken better account of especially in the European Semester, whereas budgetary control must not be tightened. Local authorities will be free to determine the content of their budgets also in the future. It is the Commission’s responsibility to ensure that the economic policies pursued by the Member States will not jeopardise the smooth functioning of the Economic and Monetary Union.

This is the background for the 2023 work programme’s initiatives related to the Capital Markets Union and the Banking Union. A well-functioning capital market and banking sector are important for Finnish cities and municipalities and for regional business policy. However, already earlier and again now, ideas about joint liability have been expressed especially in connection with the Capital

Markets Union. Joint liability means that the Member States would commit to reimbursements should a euro area country fail to meet its responsibilities. This might undermine Finland’s creditworthiness, which would probably affect local authorities, i.e. their financing costs, as well as the central government. The AFLRA reiterates its reservations on joint liability previously expressed to the Commission and considers that the conditions for fulfilling responsibilities should be in order.

Inquiries: Jari Vaine, Senior Adviser

7 Promoting our European way of life

7.1 EU migration and asylum reform

Crises in the EU’s neighbouring regions have shown that the Union must have a clear and robust migration and asylum system. The European Commission issued a comprehensive communication on the reform of migration and asylum policy in September 2020. The Communication was a fresh start to the reform of the Common European Asylum System. The management of migration has progressed as set out in the European Pact on Immigration and Asylum. The Commission aims to present the remaining proposals laid out in the joint roadmap on the Pact during the current parliamentary term.

Global conflicts, humanitarian crises and natural disasters can lead to a large number of asylum seekers and refugees arriving in Finland as well as in other parts of the EU. The EU has responded to Russia’s military aggression by triggering the Temporary Protection Directive for the first time to aid people fleeing from Ukraine. Temporary protection is intended for people fleeing the war in Ukraine and makes it possible to provide protection to a limited group of people in a swift process that is lighter than the asylum procedure. The Council decision, which entered into force on 4 March 2022, left a certain amount of discretion for Member States to decide the exact category of people to be granted protection. Finland will apply protection to a more extensive group than that defined in the EU-wide decision. The EU has also supported the Member States and regions in helping people fleeing the war in Ukraine through cohesion policy action.

A new skills package to step up legal migration

In its work programme, the Commission also presents views on integration and labour immigration. Legal immigration will be promoted through issuing a new skills package. The new initiative seeks to facilitate the recognition of qualifications of third country nationals, attracting skilled labour to Europe. Skilled labour promotes the vitality of cities, municipalities and regions.

Public sector needs should be considered in labour recruitment from third countries by developing effective practices for the recruitment of skilled workers in fields such as healthcare and social welfare. Permit procedures related to integration and recruiting third country nationals are matters that should remain within national competence also in the future.

In Finland, the government is responsible for the reception of asylum seekers. Local authorities have an important role in fulfilling Finland's humanitarian obligations, as integration is part of the functions of local authorities according to the Finnish Act on the Promotion of Immigrant Integration.

The AFLRA emphasises that the EU and Finland should provide high-quality international protection for those who need it. The contribution of local authorities to the integration of immigrants is an essential component of a successful immigration policy. Any kind of inclusion of immigrants in society contributes to social sustainability. Integration should remain within national competence also in the future.

As part of the immigration and asylum policy, the Commission presented an Action Plan on Integration and Inclusion for 2021–2027 in autumn 2020. The Action Plan emphasises that successful integration is an essential part of a well-managed and effective migration and asylum policy. The Commission has noted that even though integration falls within the national competence of the Member States, EU-wide cooperation can bring substantial benefits to the integration of immigrants. Successful integration and inclusion require early action and long-term commitment.

It is vital to ensure that local authorities continue to have access to the EU’s financial assistance for the integration of third-country nationals in the new programming period 2021–2027. Preparations should also be made for an increase in integration services following a potential influx of immigrants.

Inquiries: Anu Wikman-Immonen, Senior Adviser


7.2 European Year of Skills 2023 and an update of the learning mobility framework

The Commission has named the year 2023 the European Year of Skills. The Commission's aim is to attract highly educated professionals to sectors with a shortage of labour in Europe by proposing recognition of the qualifications of third-country nationals. The Commission's plan for a European strategy for universities and the objective of enhancing transnational cooperation in higher education is important for Finland. Higher education institutions have a central role in the vitality of municipalities and regions. Attracting talent to Finland is essential for bridging the prevailing major skills gap. Students arriving in Finland should be given the opportunity to participate in society and to find employment here so that they can stay in the country. It is also important to prevent brain drain in declining areas.

The alarming trend in Finland's demographic structure calls for the facilitation of labour immigration. The identification and recognition of prior learning is especially welcome to local authorities.

Only 15 per cent of young people have completed studies or a traineeship or participated in apprenticeship training in another EU country. The Commission will propose to update the current EU learning mobility framework to enable learners to move more easily between education systems. Although youth affairs are subject to national regulation, young people should be encouraged to cross national borders. Taking inspiration and adopting best practices is beneficial at all levels. In addition, the Commission's forthcoming initiative on traineeships needs to be monitored to ensure that all relevant factors are taken into consideration.

The formulation of EU guidelines and recommendations should ensure that national governments — and in the case of Finland, local authorities — retain their decision-making powers relating to educational, cultural, sports and youth services. Finland has consistently emphasised this point in its positions on education.

Inquiries: Minna Lindberg, Senior Adviser, and Mari Ahonen-Walker, Senior Adviser

8 A stronger Europe in the world and A New Push for European Democracy — to be monitored

If the EU wants to influence the future of our planet, it needs to pay increasingly more attention to the challenging global situation. The Commission has set the goal of strengthening the EU’s role on the global arena. This is linked to increasing the EU’s strategic autonomy, in other words, decreasing its dependency on other continents and countries. The EU should also strengthen its own security and defence capabilities. Updating the EU maritime security strategy in 2023 is one example of the Commission’s efforts in this area.

Fostering European values makes the EU stronger from within. By defending values such as democracy, the EU also provides a model for others of how to enable a society that respects human dignity. A defence of democracy package is included in the Commission's work programme 2023. The AFLRA supports municipal action, such as town twinning, that will improve democracy in Ukraine.

In 2023, the Commission will also continue work towards better regulation. Excessively detailed EU regulation cannot take into account the differences between the Member States. Raising its credibility in the eyes of its citizens will secure the EU a meaningful future.

Inquiries: Ulla Karvo, EU Affairs Manager

For more information, you can contact our specialists

Ulla Karvo
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